Billions of reasons to listen to these Unicorn startup founders

Unicorns are all the rage these days, and we're not talking about the ones in fantasy stories or on your kids' bedspreads. The unicorns that people at events like last week's TIE Startup Con (formerly TIEcon East) are agog over are private companies with valuations of $1 billion or more, such as co-working office space provider WeWork and data virtualization company Actifio, whose founders talked shop during the opening panel at the Cambridge, Mass., get-together for entrepreneurs and investors.

Unicorns are all the rage these days, and we're not talking about the ones in fantasy stories or on your kids' bedspreads. The unicorns that people at events like last week's TIE Startup Con (formerly TIEcon East) are agog over are private companies with valuations of $1 billion or more, such as co-working office space provider WeWork and data virtualization company Actifio, whose founders talked shop during the opening panel at the Cambridge, Mass., get-together for entrepreneurs and investors.

Unicorns are clearly on the rise, with panel moderator Deepak Sindwani of Bain Capital Ventures citing CB Insights research that showed that the number of billion dollar private startups has risen from 10 in 2012 to 15 in 2013 to 38 in 2014 --- and there are 15 already in 2015. Of late, the number of private company financings over $1B has exceeded the number of IPOs worth $1B, making this latest boom much different than those in 2001 and 2007.

Like the rest of the speakers at the conference, WeWork's Miguel McKelvey and Actifio's Ash Ashutosh preached the mantra of focusing on the customer and downplayed the riches their companies are reaping. They humbly relished sharing stories of scraping by in the early days of these or earlier startups.

"When you're in the moments of greatest stress, those are the most memorable," said McKelvey, whose business relies heavily on contractors to whip new office space into shape in big cities like New York and Boston so that creators can get on with creating. "We've tried to take a lot of ideas about software rapid development and iteration and apply them to construction for speed and growth."

He recalled checking his Chase account every day and watching money "going down, down, down" in the early days, then having investors literally stuffing cash and checks into his hands to keep things going, a la the closing scene of "It's a Wonderful Life".

Ashutosh concurred that "stress brings out the best in you, some of the most creative thinking...moments you still talk about 20 years later."

The secret recipe for success amounts simply to finding a big problem to solve (in Actifio's case the "$46 billion global data copy problem"), surrounding yourself with great colleagues who you love working with and "focusing on actual customer success and nothing else," Ashutosh said. Actifio, which describes itself as doing for data what VMware did for compute servers, has focused on customer needs by shifting over time from offering software to appliances to a SaaS model.

Ashutosh drew a laugh from the crowd when he said "I'd rather be a mule my customer loves than a unicorn my investor loves." (His other best line was about "the reason you don't have startups in garages in Boston. It's too cold.") In fact, Actifio's early customers loved the company so much that employees from some of those customers came to work for the startup, which launched in 2009.

McKelvey credits having a team that boasts a mixed skillset he and his partner have very different personalities. But he also said that in hiring new employees, he doesn't want them just to fit in like new spokes on a bicycle wheel, say as being the designated "mature guy." "I still want an entrepreneurial culture to exist forever," he said.

McKelvey said he knew his company was going to be a capital intensive one, so its strategy was to raise as much money as it could at the lightest value since it knew it would be coming back for more before long to finance new build-outs. Ashutosh says his strategy was to "raise as much as you need and no more," not wanting to fritter it away or forfeit too much of the company to investors.

As to whether the current unicorns are going to go "poof" like the bubbles before them, McKelvey says we're at least not in a bubble culturally. By that he meant that entrepreneurial spirit has become much more widespread even at the elementary school level where he comes in to speak sometimes -- than when the earlier tech startup bubbles blew up and a relatively thin layer of business people were affected.

Actifio CEO Ashutosh says that he started the company at exactly the time one prominent venture capital firm was telling people to avoid startups and go work for IBM or HP. "Bubble or no bubble, I don't care. I focus on customers and doing the right thing."

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